PetSmart’s Chewy gets Wall Street tails wagging with $1 billion IPO

NEW YORK (Reuters) – Chewy Inc said on Thursday it priced its initial public offering at $22 per share, above its target, and sold more stock than originally planned, valuing the online pet products retailer at $8.77 billion.

FILE PHOTO: The Petsmart store in Westminster, Colorado is seen November 18, 2014. REUTERS/Rick Wilking/File Photo

The IPO raises funds to help manage the debt load of parent company PetSmart, and indicates investor demand for a loss-making but fast-growing e-commerce company to tap into the roughly $70 billion U.S. pet industry market.

Chewy’s sales have rocketed from $26 million to $3.5 billion between 2012 and 2018. Its 2018 net loss narrowed to $267.9 million from $338.1 million in 2017.

Some 46.5 million Chewy shares were sold in the IPO, up from the anticipated 41.6 million as PetSmart sold more shares than originally planned.

At $22 per share, PetSmart will receive almost $900 million from the sale of its stock. Chewy raised $123.2 million, which the company has said will be used for working capital and other expenses.

Chewy had set a price range of $19 to $21 per share, which was raised earlier this week from $17 to $19 per share.

Chewy pitched its stock to investors as a way to buy into the trend of “pet humanization” by owners who are increasingly treating pets as a part of their families, as well as buying into an industry which has historically held up well in economic downturns.

Private equity firm BC Partners Inc acquired PetSmart for $8.7 billion in 2014, as it sought to capitalize on consumers lavishing their pets with expensive treats and gear.

However, the company quickly faced strong headwinds as many customers snubbed its stores for the convenience of online shopping.

In response, PetSmart acquired Chewy in 2017, adding $2 billion to PetSmart’s debt load to do the deal. The IPO values Chewy at almost three times the $3.35 billion PetSmart paid for the company.

Chewy competes with Amazon.com Inc and Blue Buffalo Pet Products, which was acquired by General Mills Inc last year.

Chewy is trying to foster customer loyalty, an effort which has included sending bereavement cards to shoppers who have recently lost a pet.

Chewy co-founder Ryan Cohen sees plenty of growth left for the company and long gone are the company’s early days when it struggled to attract capital.

“There’s still lots of penetration and growth to be had just within the U.S. market, there’s continuing to expand internationally,” Cohen, who stepped down as CEO of Chewy in 2018, said in an interview earlier this week.

After the IPO, PetSmart and BC Partners will retain control of Chewy through their class B shares, which carry considerably more voting power than the class A shares investors in the IPO are buying.

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The IPO comes after PetSmart settled a dispute with lenders in April over the transfer of a portion of its stake in Chewy to certain PetSmart subsidiaries.

Shares of Chewy are expected to start trading on the New York Stock Exchange on Friday under the symbol “CHWY”.

Gotta wonder if this car will be good enough to not need to use joe , doc, etc. because your always 5-10 points short . You and chuck crying because chief and Dave kept racing just like you and chuck did he’ll even when there weren’t any races you and chuck raced golf carts . And before all that it was ole murder nova and doc constantly racing , the show is turning into general hospital with a lil bit of daycare . Bird man , Mike Murillo, Kye, Lizzie , Scott . Well they race and see where they end up . 405 is Turing into a bunch of lil babies that have to cheat to lose . Just such a shame if you guys did not cry so much and just race

“Nobody knows what was said. We were in a heated conversation down there. It went too far. Unless you know the whole story and what was said other than just watching it on TV, you don’t get it." It appears Steve still doesn't get it. Do you honestly think if everyone knew the words that were exchanged, that... that would justify your actions, Steve?!!! We heard your crew chief just prior. We had a context to fit it in. Then we watched you and Cameron in horror. You're a coward, Steve. You shake hands in a deceptive manner, then you hold your hand up, about midway and while Cameron is slightly looking away and smiling, looks back and then, wow... you let him have it. Too bad your crew was there to protect your scrawny little arse. It would have been fun watching Cameron kick the crap out of you. This was just one incident. Everyone has listened to the ignorant whining of a punk from two years ago after losing to Force. Unfortunately, we'll probably have to hear and see more stupidity from an ignorant know-nothing!!! I'd suggest Capco provide some sponsorship dough to Cameron's team. What we saw was an assault and felony in broad daylight that if it happened anywhere else, Steve would be having to hire a lawyer on a civil suit. At least the NFL has the sense to suspend a player from Cleveland. NHRA should have penalized you, Steve, with a (5)- point infraction giving the title to a well deserved winner in the form of Doug Kalitta. That would have been the right thing to do instead of rewarding a punk with a large check.

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